2 a.m. and 7 a.m.: At 2 a.m. in the Mill Lane bakehouse, Priti and her six bakers are shaping dough. By 5 a.m. 1,450 loaves are cooling on racks, waiting for the vans.
At 7 a.m. on Station Road, a commuter asks for the $3 coffee-and-croissant deal. Ninety seconds later she is gone, coffee in hand.
Both are operations: turning inputs into outputs (5.1.1). But the loaf is a thing, and the ninety seconds at the counter is not.
A good is a physical product you can touch, carry away and keep: a loaf, a packet of crackers, a phone. A service is something done for you: making and handing over the coffee, a haircut, a bus ride. You pay for the doing, and you cannot take it home in a bag.
| A good: the Mill Lane loaf | A service: the Station Road counter | |
|---|---|---|
| Can you touch it? | Yes, it is a physical thing (tangible) | No, it is something that happens to you (intangible) |
| Can it be kept for later? | Yes: baked at 2 a.m., sold at 7. The crackers keep for weeks | No: an hour with no customers is lost for good (perishable) |
| Is the customer there when it is made? | No: the bakers work at night and customers never see them | Yes: it is made and used at the same moment (inseparable) |
| Is it the same every time? | Nearly: same recipe, same oven, same weight | Not quite: it depends on who serves and how busy it is (variable) |
| Can it be checked before the customer gets it? | Yes: a burnt loaf is taken off the rack | Hardly: a wrong order or a rude reply cannot be taken back |
Most businesses sell a mix: Very few businesses sell only a good or only a service. The croissant is a good; handing it over with a coffee, fast and with a smile, is a service. A restaurant sells the food and the evening around it.
So the useful question is rarely 'goods or services?'. It is: which part of what this business sells is a good, and which part is a service?
Lena's Bakery Ltd has both under one company. Mill Lane makes goods. The four shops, High Street, Market Square, Park Road and, since September, Station Road, sell those goods with a service. That is why the two halves are run so differently.
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Priti at Mill Lane and the team at Station Road want the same things from operations: work that is efficient, at the right quality, at a cost the business can afford (5.1.1). What differs is how they get there, because one makes a thing and the other serves a person.
| The operations question | Mill Lane (goods) | Station Road (a service) |
|---|---|---|
| Where does the work happen? | Anywhere with space: customers never visit a bakehouse | Where the customers are: by the station, on the way to work |
| When does the work happen? | Ahead of demand: loaves baked at 2 a.m. for a 7 a.m. sale | At the moment of demand: a coffee is made when it is ordered |
| How is a busy morning handled? | Bake more the night before and hold it as stock | Put more people at the counter: the rush cannot be made in advance |
| How is quality kept? | Check the product: Priti checks every batch before it leaves | Train the people: one routine for every order, then listen to customers |
| What do the staff need? | Baking skills, and ovens that run reliably | People skills: speed, friendliness, getting the order right |
| How is it measured? | Loaves per oven hour, waste, cost per loaf | Customers served per hour, waiting time, complaints |
The rush, in numbers: Lena expects about 120 of Station Road's 300 customers a day between 7 and 8 a.m. One person at the counter serves about 40 customers an hour, ninety seconds each.
So the rush needs three people at the counter: 120 ÷ 40 = 3. At 3 p.m., with about 20 customers an hour, one person is plenty.
If only one person is on at 7 a.m., the queue grows, and commuters with trains to catch walk away. Those sales are lost; they do not come back at 3 p.m. Mill Lane has no such problem: a loaf not sold at 7 is still on the shelf at 8.
Stock or staff: A goods business can even out demand with stock: make it when it suits, sell it when customers want it.
A service business cannot. It has to match its staff to demand hour by hour, and those staff are part of what the customer buys.
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Back to the loaf: In 1.1.3 you followed a loaf along the chain: take, make, serve, know. Valley Grain's farmers grow the wheat, Mill Lane bakes it, the shops sell it, and a food lab designed the flour blend and now tests it.
Every link turns inputs into outputs, so every link has an operations job. It is a different job in each one.
Primary: Valley Grain's farms
- Inputs: land, seed, fertiliser, tractors and the weather
- Output depends on nature: a wet summer cuts the harvest, whatever the plan said
- One harvest a year, so the grain is dried and stored to last until the next
- Measured in tonnes of grain per hectare, and its quality
Secondary: the Mill Lane bakehouse
- Inputs: flour, ovens, energy and the bakers' skills
- Output is planned: 1,450 loaves a night, checked before they leave
- Made away from customers, so it can be wherever there is space
- Measured in loaves per hour, waste and cost per loaf
Tertiary: the four shops
- Inputs: staff, the shop, and the loaves from Mill Lane
- Output is a service, made with the customer standing there
- Must be where customers are, and open when they want it
- Measured in customers served, waiting time and complaints
Quaternary: the food lab
- Inputs: skilled scientists, test equipment and data
- Output is knowledge: a report on the flour, not a thing
- Can be done far from the farm; results can be sent online
- Measured by accuracy and speed; the main cost is skilled people's time
Read the cards from left to right. The output changes from what nature gives, to what people make, to what is done for a customer, to knowledge. Operations changes with it: from managing nature, to managing materials and machines, to managing people and customers, to managing skilled people and information.
The links depend on each other: Each link works with what the link before it hands on. A poor harvest at Valley Grain means dearer flour at Mill Lane, and dearer flour means fewer loaves or higher prices on Station Road's shelves.
So a business watches the links either side of it, not only its own.
Opening Station Road in September gave Lena two operations problems at once: one for goods, one for a service. She solved them in completely different ways.
One new shop, two kinds of operations
The goods: 250 more loaves a night
Mill Lane now bakes 1,450 loaves a night instead of 1,200. At 600 loaves an hour, oven time rises from 2 hours to about 2 hours 25 minutes. Baking starts at 2 a.m. and the vans leave at 5, so it still fits in the night.
Made ahead, held as stock
The extra loaves are baked before anyone has asked for them. If Station Road sells fewer, the rest go to Second Helpings, as unsold bread always has.
The service: the 7 a.m. rush
No oven can bake a queue away. Station Road needs three people at the counter from 7 to 8 and one in the afternoon, so its rota follows the commuters hour by hour.
Quality through people
Priti can check a loaf before it leaves. Nobody can check a coffee order before it is served, so every new member of staff learns one routine for the deal, and Lena reads the customers' comments each week.
Goldcrust keeps the two apart: Goldcrust plc takes the split further. Its bread is made in one large factory in Seren, Marovia, far from most of the people who eat it. Its 400 bakeries are where the customers are.
The factory is run for a low cost per loaf; the bakeries are run for speed and service. Two kinds of operations, managed apart.
The same two questions work for any business. First: which part of what it sells is a good, and which is a service? Then: what does each part need from operations? Stock or staff; checking the product or training the people; wherever there is space, or wherever the customers are.
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How this comes up: Short questions ask you to state two features of a service, or to describe one way operations differ between a good and a service.
The four-mark version names a business that has both: explain two differences between operations in its factory and in its shops, or on its boats and in its restaurant. Every difference needs the business in it.
The four-mark pattern
- Name the first difference. A good can be made ahead and stored; a service is made when the customer asks for it.
- Show it in the business. Mill Lane bakes at 2 a.m. for a 7 a.m. sale; Station Road cannot make its rush-hour coffees until commuters order them.
- Name the second difference. A good is checked before it leaves; a service depends on the person delivering it.
- Show it in the business. Priti checks every batch at Mill Lane; at Station Road, quality rests on how well the counter staff are trained.
The trap: one difference said twice: 'Services cannot be stored' and 'services are perishable' are the same difference in two wordings. So are 'intangible' and 'you cannot touch it'.
Pick two that lead to different operations jobs: stock against staffing, or checking the product against training the people. And a sector label is not a difference in operations: 'one is secondary, one is tertiary' explains nothing on its own.
Explain two differences between operations at Lena's Mill Lane bakehouse and at its Station Road shop.
Model answer plan
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